offtaker having addressed them, by entering into public contracts with the 
latter. Under the contracts, Karachaevo-Cherkesskenergo JSC and 
Kabbalkenergo JSC sell electric power to the Company for business and 
administrative needs thereof. The payment is made at the price and/or 
pursuant to the price determination procedure fixed as per the provisions, 
as in force on the payment date, of Federal Laws, other regulations, as 
well as acts adopted by the authorized bodies in the sphere of state 
regulation of tariffs; 
 
? STC UPS Protivoavariynoe Upravlenie JSC is a Competency Center for 
mathematical, digital and physical modeling/simulation of power systems, 
research of electrical modes, steady-state and transient stability, 
development and design of devices and systems for relay protection, mode 
and emergency control, development of specialized software, and is also 
the only organization that can provide such services, with no equivalent 
replacement in the market. The contracts between the Company and STC UPS 
Protivoavariynoe Upravlenie JSC were executed for the purposes of 
implementing measures of accident rate reduction at the industrial sites 
specified in a range of binding documents. 
 
? PJSC FGC UES is an organization for managing the unified national 
(all-Russian) power grid under Article 8 of the Federal Law "On Electric 
Power Industry" and provides services for the transmission of electricity 
under conditions of natural monopoly. As a participant in the wholesale 
electricity and capacity market, the Company sells electricity and 
capacity as produced, which requires that the Company's generating 
facilities be connected to the PJSC FGC UES power grids. The connection to 
the power grids is performed by entering into contracts with PJSC FGC UES 
in accordance with the procedure specified by the Government of the 
Russian Federation, and at prices determined in accordance with the acts 
of the Government of the Russian Federation; 
 
? The Company is a participant in the WECM and a party to the Joining 
Contract. The Company concludes contracts in accordance with the WECM 
Rules and the WECM Regulations. The terms and conditions of the Joining 
Contract are binding on the parties when they participate in relations on 
the wholesale electricity and capacity market (WECM). 
 
The Company and PJSC FGC UES, in accordance with Sub-Clause 4 of Clause 4 of 
  the WECM Rules, have entered into agreements for the supply of capacity at 
            free prices based on the results of competitive capacity takeoff 
   (hereinafter, the "CCT Agreements"), where the Company acts as a capacity 
                                                                   supplier. 
 
    Prices under the CCT agreements are determined in the course of / on the 
        basis of competitive procedures (competitive selection) conducted in 
             accordance with the WECM Rules and Joining Contract provisions. 
 
  Selecting such counterparties was stipulated by unbiased factors such as a 
 unique status of the counterparties at a particular market, and peculiarity 
   of the electricity and capacity market structure; part of the contractual 
   terms and conditions are governable by the RF Government acts. Therefore, 
concluding such contracts has no relation to M. S. Bystrov's being Member of 
                                      the Board of Directors of the Company. 
 
 M. S. Bystrov's relatedness to the Company, which appeared in June 2020, is 
   of nominal nature and exerts no influence on his ability to form unbiased 
  and independent opinions as to the agenda items considered by the Board of 
       Directors and act for the benefit of the Company and all shareholders 
                                     thereof, due to the reasons as follows: 
 
? since 2015, M. S. Bystrov has been sitting on the Audit Committee under 
the Board of Directors of the Company; from 2015 through July 2019, he was 
sitting, and from December 2020 has been sitting, on the HR and 
Remunerations (Nominations) Committee under the Board of Directors of the 
Company. From 2013 through 2020, he was also sitting on other Committees 
under the Board of Directors of the Company. The long period of M. S. 
Bystrov's work with the Board of Directors of the Company, HR and 
Remunerations (Nominations) Committee and Audit Committee under the Board 
of Directors is of advantage for the Company, since M. S. Bystrov has the 
necessary many years' professional experience in electric power industry, 
investments, economy and finance, and extensive knowledge of the Company 
business, which facilitate and enhance the performance of the Board of 
Directors of the Company and the Committees thereunder; 
 
? M. S. Bystrov signed a Declaration of a Board Member / a Candidate to 
the Board of Directors of the Company Recognized as Independent, in the 
form recommended by Moscow Exchange; 
 
? throughout the period of filling the Board Member vacancy, M. S. Bystrov 
has been involved actively in the activities of the Board of Directors of 
the Company - he has been participating in the absolute majority of 
meetings held by the Board of Directors (including all meetings of the 
Board of Directors, Audit Committee, and Investment Committee, as held 
since the beginning of 2020); 
 
? M. S. Bystrov's track record with the Company Board of Directors and 
Committees under the Company Board of Directors in 2013 - 2019 has been 
demonstrating his ability to provide independent, unbiased and fair 
judgments, since M. S. Bystrov's stands as to the agenda items of meetings 
of the Board of Directors and the Committees are based on his professional 
expertise and experience, being rational and independent, and the nature 
of resolutions adopted by M. S. Bystrov previously and at present allow 
coming to a conclusion that his nominal relatedness to the Company and a 
substantial counterparty of the Company will affect neither independence 
of M. S. Bystrov, nor his ability to act for the benefit of the Company 
and all shareholders thereof. 
 
In addition to the aforementioned actual relatedness criteria, M. S. Bystrov 
 was found to be potentially related to entities controlled by Rosseti PJSC, 
 operating in the wholesale and retail electricity and capacity markets, due 
     to the existence or possible conclusion by the Company of the following 
                                contracts with the following counterparties: 
 
    A) contracts with the only guaranteed supply companies in the territory, 
              under which contracts the Company purchases electric power for 
  administrative and business needs, and the aggregate amount of liabilities 
     may exceed 2% of the book value of assets and/or 2% of the revenue of a 
                                                  guaranteed supply company; 
 
    Guaranteed electricity supply companies purchase energy resources on the 
         wholesale market and sell them to any offtaker who applies to them, 
     concluding public contracts with those offtakers. Under such contracts, 
     payment is made at the price and/or pursuant to the price determination 
  procedure fixed as per the provisions, as in force on the payment date, of 
  Federal Laws, other regulations, as well as acts adopted by the authorized 
                        bodies in the sphere of state regulation of tariffs; 
 
    B) contracts for technological connection with grid organizations, under 
which the Company acts as an offtaker and the grid organizations connect the 
 Company's power receivers to their power grids, and the aggregate amount of 
      liabilities may exceed 2% of the book value of the grid organization's 
                                           assets and/or 2% of its revenues. 
 
      In order to purchase electricity for its own needs, the Company may be 
        required to connect its power receivers to power grids owned by grid 
distribution companies operating in the relevant territory, which connection 
is done on the basis of contractual relations whose price and conditions are 
 regulated in accordance with the procedure established by the Government of 
                                                     the Russian Federation. 
 
At the conclusion of such contracts the Company has no opportunity to select 
     other counterparties or change the material terms and conditions of the 
       contracts against those prescribed by the respective regulatory legal 
                                                                  procedure. 
 
 C) regulated contracts the Company as a seller of electric power (capacity) 
 concludes (may conclude) in accordance with Clause 4, Sub-Clauses 1, 9, and 
 10, of the WECM Rules, and competitive contracts the Company as a seller of 
electric power (capacity) concludes (may conclude) in accordance with Clause 
        4, Sub-Clauses 3 through 5, 7, and 13 through 15, of the WECM Rules. 
 
        Conclusion of these contracts is conditioned by unbiased factors and 
arrangements of the WECM, the standard forms of contracts have been approved 
   by the Supervisory Board of NP Market Council Association, and the scope, 
       price and cost of the said contracts are determined by the Commercial 
   Operator of the WECM in accordance with the acts of the Government of the 
                  Russian Federation and/or the Joining Contract provisions. 
 
  The Company is a participant in the WECM, a party to the Joining Contract, 
and concludes contracts/agreements in accordance with the WECM Rules and the 
        Joining Contract provisions. The terms and conditions of the Joining 
Contract are binding on the parties when they participate in the circulation 
   of electric power and capacity in the wholesale electric power (capacity) 
                                                                     market. 
 
    Prices (tariffs) under regulated contracts are determined by the federal 
                    executive body in charge of state regulation of tariffs. 
 
Prices under the competitive agreements are determined in the course of / on

(MORE TO FOLLOW) Dow Jones Newswires

December 24, 2020 09:45 ET (14:45 GMT)